BP (LSE:BP) shares are falling and it’s not just because oil prices are coming down. The company has let go of its chair, Albert Manifold, for reasons of personal conduct.
Manifold denies the allegations and I don’t know the full facts. But what does it all mean for investors?
What exactly do you do?
Disclosure: I’m a Spurs fan.
A company’s chair is a bit like a football club’s director of football. If – like me – you’re a Spurs supporter, that might not be much help.
In theory, the job of a director of football isn’t just to oversee the club getting nearly relegated two seasons running. It’s actually to do useful stuff.
That includes establishing the footballing identity and overseeing the head coach. With a company, the chair does something similar.
The role of chair includes things like overseeing the CEO and defining the organisation’s culture. And for BP, those are really important.
Albert Manifold has just been removed from the role. Whether or not that’s the right move, it’s vital that BP gets its next appointment right.
BP’s transformation
BP’s ventures into renewables over the last few years have been a huge unforced error. So the firm appointed Meg O’Neill as CEO in April to shift back to hydrocarbons.
This looks like the right move to me. In many ways, it’s similar to Spurs bringing in Roberto de Zerbi to fend off a relegation crisis at around the same time.
With that job accomplished – just – Spurs now need to back their manager. And the same goes for BP as it looks to refocus on its core competencies.
If Meg O’Neill is going to turn the organisation around, she’s going to have to be able to work with the chair. So having the right person in that role is crucial.
What difference will it make?
In the short term, Manifold’s departure isn’t going to make much difference. BP won’t drill more or less oil, or be able to sell it for higher or lower prices.
In much the same way, Spurs don’t win or lose at the weekend because they’ve decided to keep or dispense with their director of football.
From a long-term perspective, though, it matters much more. For Spurs, one result isn’t attributable to the director of football, but overall seasons are.
In the same way, BP’s long-term earnings depend on Meg O’Neill’s ability to execute a strategic shift. So a move to support this can only be a good thing.
Despite this, the stock is down. So does that mean there’s an opportunity for investors to buy the stock at an attractive price?
Should I buy BP shares?
As a Spurs fan, I’m acutely aware of what a dysfunctional organisation looks like. But it’s not something I actively try to seek out.
BP, however, is in the process of transformation. And that means there could be a lot to gain from things getting back on track.
With oil prices where they are, I’m not convinced that right now is the time to be investing in this industry. But BP is on my list if things change.
The firm is doing the right things. Whether or not I can say the same for Spurs remains to be seen…
Stephen Wright does not own shares in any of the companies mentioned.
